Indian bitcoin exchanges are raising questions over the applicability of goods and service tax (GST) to their operations.
Seven bitcoin exchanges in the nation including Unocoin, Zebpay and CoinSecure are seeking clarity over how their businesses might be classified under GST rules, and are planning to approach the Authority for Advance Rulings (AAR) – the government body that decides on the applicability of tax rates – over the matter, the Economic Times (ET) states.
An official familiar with the matter told the news source that at least one bitcoin exchange has already filed an application with the Maharashtra state AAR to clarify ambiguities over its tax liability.
The official said:
“The tax department is currently researching the concept as bitcoins are a very complex subject.”
Under the GST rules, if bitcoin is considered to be a currency, there would not be any taxes applicable, ET states. However, if it is recognized instead as a good, GST at 18 percent could be applicable, or, in the case of it being deemed a service, 12 percent.
Abhishek A Rastogi, a partner at law firm Khaitan & Co, told ET that there is ambiguity for bitcoin exchanges over whether GST is applicable on total revenue or merely on margins earned. He continued to say, “the tax authority must give clarity on whether bitcoin exchanges are selling goods and services, or are mere trading platforms that earn margins.”
The move comes a month after the Indian tax department visited bitcoin exchanges across the country seeking to identify users. The operation was carried out over suspicions of tax evasion by some exchange customers.
Indian rupees image via Shutterstock
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Published at Fri, 05 Jan 2018 12:51:02 +0000